Publishers’ New Year’s resolution: more experimentation, cautious optimism

Steve Rainwater

As 2016 draws to a close, you’d almost think the holiday season was bringing some much-needed good cheer to the journalism industry. On Tuesday, The Washington Post Publisher Fred Ryan sent a memo to staffers which praised their work, trumpeted web traffic and subscription growth, and included the following note in its seventh paragraph:

Not to bury the lede, but thanks to the incredible work of the entire team, The Washington Post will finish this year as a profitable and growing company.

A few days earlier, The New York Times Co. CEO Mark Thompson hailed a “surge” in subscriptions following the election of Donald Trump, and said the ambitious goal of 10 million subscribers “is very possible for us.” Newspapers, magazines, and nonprofit journalism outlets around the country reported similar audience and subscription bumps.

Not to play Scrooge, but the reality is 2016 was not a good year for the journalism business. Major players like The Wall Street Journal and Gannett announced layoffs, and cuts are coming to The New York Times. The Guardian laid off 30 percent of its US staff, while Mashable and Univision also saw major reductions in their newsrooms. Al-Jazeera America and Gawker disappeared completely.

The culprit continues to be the continuing, precipitous fall in print advertising–an average decline of 20 percent for many newspapers–and the inability of digital revenue to pick up the slack. Online advertising continued to grow in 2016, with 72 cents of every new ad dollar going to digital outlets, according to GroupM. Unfortunately for publishers, 85 percent of that spending went to Facebook and Google.

In addition to the competition from Silicon Valley, publishers face several challenges in maximizing their digital revenues. The first comes from consumers who simply aren’t seeing their ads. According to a report from the Interactive Advertising Bureau, more than a quarter of desktop users and 15 percent of mobile consumers use some sort of blocker to remove ads from publishers’ websites. Digiday projects that ad blockers will cost publishers $35 billion in lost revenue by 2020.

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Additionally, banner blindness and consumer frustration with unrelated or clickbait content has led several publishers to reconsider their advertising strategies entirely. Despite advances in targeted advertising and a still-robust demand for display ads, several major players, including The New York Times, are moving away from traditional digital marketing formats.

As publishers struggle to boost digital revenues, they seem to be coalescing around a few key strategies, which they hope will slow what has seem to be an unstoppable decline. They include:

 

Install innovative paywalls

Whether print, digital-only, or some combination of the two, subscription models offer publishers a steady revenue stream and signal commitment from readers. The New York Times has pushed hard for subscription growth, and recently announced that it has more than 2.6 million combined print and digital subscribers. In an age of plummeting print advertising, those subscribers provide a foundation of financial stability for the paper.

In August, The Wall Street Journal tweaked its paywall to make it more “bendy”, with 24-hour passes offered to users who share their email addresses and full access to individual articles shared by Journal staffers and subscribers on social media.

This sort of flexibility is needed, says Paul Johnson, CEO and co-founder of MPP Global, a UK-based company that works with publishers like The Daily Mail, The Irish Times, and L’Equipe. “Publishers need to be far more creative than they have in the past. Certainly, online we’ve rarely seen the model where you can buy today’s edition of the newspaper or a 24-hour pass for the newspaper, yet every day people are going into stores and buying a newspaper for a dollar or two,” Johnson told CJR.

 

Experiment with micropayments

 In March, the two-year-old Dutch micropayment company Blendle launched in the US. The Blendle app curates articles from its publishing partners, which in the US include The New York Times, The Wall Street Journal, and The Economist, and charges readers a small fee–between nine and 49 cents–for each piece of content they consume.

The so-called ‘iTunes for news’ model has yet to gain traction in the US, but publishers in other countries have had some success experimenting with it, and Blendle has been joined in the US market by smaller outfits, Tibit and Outl!t.

Outside of partnering with an app, publishers can experiment with micropayments on their own websites. Earlier this year, The Winnipeg Free Press became the first North American paper to launch a pay-as-you-go model, charging readers 27 cents ($0.20 US) for each article they read. Though the paper’s leadership has cautioned that it expects a long process in achieving its goals, the experiment bears watching.

MPP Global’s Johnson, whose company provides the platform that the Free Press uses to keep track of payments and bill customers, says that transaction processing technology, one of the barriers for micropayments, has improved enough for publishers to experiment on their own sites. Doing so, he says, allows outlets to draw revenue from users who might not be part of the core readership. “If they’re not quite ready for a fixed monthly subscription or they’re more transient or ad hoc users or maybe they’re just still not sure whether they want to commit to a subscription we can say, ‘pay-as-you-go.’”

 

Strengthen relationships with readers through email

With the death of the homepage, readers spend less time engaging with the full slate of any publisher’s content. To circumvent the algorithms Facebook and Google use to determine who sees what, connecting directly with consumers often requires getting to their inboxes.

“Email is the direct relationship with the audience,” says Keith Sibson, vice president of product and marketing of PostUp, which provides email marketing platforms to clients including NBC, Disney, and The Golf Channel. “Whereas a lot of the things going on in the digital publishing world are about people coming up against an intermediary in that relationship, Facebook being a really big part of that.”

For many publishers (including CJR), email newsletters are a way to share content they want to highlight with consumers who have signaled their willingness to engage. “When someone signs up on a publisher website, and provides their email address, what they’re essentially giving is an invitation,” Sibson said.

Getting that invitation is the first step towards deepening a relationship with consumers that exists outside the walled garden of social platforms. Once readers have engaged enough to sign on for a newsletter, publishers have the ability to tailor content for that user’s interests, from politics to cooking. Many outlets have already embraced this strategy; The Washington Post offers 65 separate newsletters that readers can choose from and The New York Times sends out 53, including seven that focus on ‘special offers’ that provide deals on products offered by premium advertisers.

Whether by partnering with advertisers to bring consumers specific products or simply drawing readers directly to an outlet’s website, email provides an end run around the dominance of Facebook and Google, and while they’re no silver bullet, the prevalence of newsletters shows that many publishers have already realized this. “Email is not going to change publishing businesses overnight,” Sibson says. “But it can become a very big part of their revenue streams.”

  

Embrace (carefully) native advertising

In a 2013 post criticizing the new fad he described as “advertising wearing the uniform of journalism, mimicking the storytelling aesthetic of the host site,” the venerable New York Times media critic David Carr advised caution in the use of native advertising or sponsored content.

Carr’s warning didn’t stop the Times from following early adopters like BuzzFeed, Forbes, and The Atlantic in embracing native advertising. The paper opened its own native advertising shop, T Brand Studio, the following year. In 2015, the in-house operation generated $35 million in revenue, and is expected to produce an even bigger revenue boost this year. As publishers rethink the sort of ‘Around the Web,’ clickbait articles that often appear at the bottom or on the side of stories, native advertising has emerged as a premium option for both publishers and advertisers.

Sponsored content provides brands with the opportunity to draw in consumers through articles or videos that look and feel like the content already appearing on a publisher’s website. Some formats include buttons to immediately buy the advertised product, with the publisher receiving a share of the purchase. “We want to create stories around products, either around editorial with words, or with videos,” says Josh Payne, CEO and Founder of StackCommerce, a native advertising agency that has worked with AOL, Hearst, and Gawker Media. “And we want to help publishers to incrementally monetize their sites.” 

This approach, as Carr noted, raises concerns about blurring the lines between editorial content and paid advertising. The Federal Trade Commission issued guidelines for native advertising a year ago, but an April report by MediaRadar found that around 70 percent of websites were not in compliance with the FTC’s instructions.

If clearly labeled and correctly targeted, native advertising can be an effective revenue-generator for publishers. Many bigger outlets, like The Guardian and The New York Times, are already in compliance, but other sites still need to adapt. “We’re all evolving here,” Payne told CJR. “It can be done right, and it can be done poorly, but hopefully more and more people are doing it right.”

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Pete Vernon is a CJR Delacorte Fellow. Follow him on Twitter @ByPeteVernon.